Perhaps a long backtest will reveal the usefulness of the new vix on vix.
Our observation is that as the VIX hovered at relatively high levels in fall 2011 (after the initial surge to 48), the elasticity or sensitivity of the VIX itself was NOT very high. And thus the options on the VIX did not shoot up as much when the market had a bad day. This is because the VIX has a built-in reversion to the mean. Now, as the VIX has come down to "average" or more normal long term levels, the VIX is very sensitive to movements in the SP500. Thus the VIX has more elasticity. So a VIX on VIX might show higher vol at low VIX levels and lower vol at higher VIX levels. See more from my linked-in group on VIX

3:51 am March 15, 2012

Tom Hogshead PhD wrote :

It will be interesting to see how the "VIX of the VIX" compares to just the VIX. In the meantime, Volatility Research has come up with a pretty good way to predict VIX "fear index" volatility as measured by NYSE VXX: